Deep dive: Green innovation, gray area?

Whether you’re developing new protein sources or even manufacturing methods, an effective IP strategy can help you secure investment and carve out a competitive edge in what many people believe will be a booming alternative proteins market. Here, Nick Bradley speaks with some global experts to discuss some of the complexities in protecting your innovations

Innovation in the field of alternative proteins is being fueled by a constant stream of R&D efforts from startups and established companies alike. However, to ensure the continued progress and commercialization of these novel solutions, a robust intellectual property (IP) framework is critical. Patents, especially, can act as a catalyst for innovation, a magnet for investment, and can help foster a healthy, competitive market.

As in many other areas of alternative proteins, such as regulations and scaling, though, the IP landscape faces several challenges. With the field evolving so rapidly – and the patenting process arguably being slow and cumbersome – by the time a patent is granted, the protected technology might already be outdated or surpassed by newer innovations. Many alternative proteins also involve intricate biological processes or combinations of ingredients. Writing clear and enforceable patents for these creations can be difficult, leaving room for legal loopholes that competitors may be able exploit. And while an open-source movement appears to be gaining traction in the industry, with researchers and companies sharing discoveries freely to accelerate progress, it can make it harder for individual companies to claim exclusive ownership through traditional patents.

Navigating these challenges requires a multifaceted approach, so companies may need to explore alternative forms of IP protection, such as trade secrets (about which we’ll focus on later). At the very least, you should absolutely call upon legal professionals who can not only help guide you through these potentially choppy waters but also potentially save you considerable time and expense later on down the line.

Analyzing the complexities

“Especially for startups, understanding existing IP rights is crucial before starting product or process development,” suggests Laura Clews, Managing Associate at Mathys & Squire. “This lengthy and expensive process can be derailed if your final product infringes on someone else’s patents or trademarks.”

The IP expert therefore suggests that conducting an IP audit early on allows for minor adjustments to avoid such conflicts. “Researching existing knowledge is another important step,” she continues. “Look at scientific publications, podcasts, and articles to identify potential inventors and understand what differentiates your product or process. This helps you define your product’s unique benefits. Finally, confidentiality is key. Keep all information related to your invention secret until you file a patent application!”

“A big challenge with intellectual property is the speed of decision-making and the overall cost for businesses,” adds Clews’ colleague, Chris Hamer, Partner at Mathys & Squire. “People used to think a patent guaranteed profits, but you need a plan to monetize it,” he says. “Another key point is that IP rights are national. A UK patent only protects you in the UK, not worldwide. This can be tough as international patents are expensive.”

Hamer therefore highlights the importance of aligning your IP strategy with your business plan. “You should decide early how to make money from your IP,” he says. “Maybe focus on Europe and license your US rights to a well-funded partner. These decisions need to be made early in the IP process, around two years in. Many businesses miss this. Realizing you can’t conquer everything is key. I would advise that you focus on core markets and strategic partnerships to make the IP process less stressful and align it with your business goals.”

Especially for startups, understanding existing IP rights is crucial before starting product or process development

The IP complexities for a startup in the alternative proteins space are probably similar to other nascent sectors, according to Dr Sara Holland, Partner and UK & European patent attorney at Potter Clarkson. “You’ve not got much money, you need to protect what you can protect, primarily for your own business purposes,” she says. “You don’t want people copying you. But you also need to protect inventions to secure investment. Investors seem to prefer companies to at least have a patent. Some investors seem to do a lot of IP due diligence, but a lot don’t do anything – they will just look at the pitch deck and ask, ‘Well, where’s your IP?’ And if the startup can’t give a valid reason as to why they haven’t got any patents or other legal rights, I think that’s where a lot of them fall down.”

The reality is that if you’re aspiring to be the next Beyond or Impossible, investors are more likely to back ventures with a demonstrably defensible competitive advantage.

Strong IP ownership not only significantly increases a company’s valuation, but companies with strong IP portfolios are more attractive candidates for acquisitions or mergers, providing investors with a clear path to realizing their investment.

Beyond Meat’s IPO in 2019, for example, was a resounding success, partly due to its IP portfolio. Investors recognized the value of the company’s proprietary technologies, which played a significant role in driving their investment decision.

For Andrew Tindall, Senior Associate at Potter Clarkson, realistic scope is another huge challenge for startups. “In my experience doing due diligence, I’ve seen many early-stage companies chase broad patents for grand ideas, such as growing chicken cells in a bioreactor. While these ideas may be exciting, achieving such broad protection is often unrealistic,” he says.

What’s the ideal IP strategy?

Given the multitude of complexities, then, what is the ideal approach for companies in the novel foods sector when it comes to IP strategy? “There’s no one-size-fits-all answer,” continues Holland. “It depends heavily on your specific business model. For example, if you plan to widely license your product, trade secrets likely aren’t ideal. Public disclosure, even partial, can make reverse engineering easier. On the other hand, if you intend to keep everything in-house, trade secrets could be a viable option. In the realm of cultivated meat production, many companies opt for trade secrets because patents often become very narrow, essentially revealing your exact process.”

Ultimately, Holland believes a key takeaway is to strategically utilize both options. “Use patents to protect what needs public recognition, and leverage trade secrets for confidential information that doesn’t require public disclosure,” she advises.

In addition to potentially lasting indefinitely, a specific advantage of trade secrets is that there are no specific legal requirements for information to qualify as a trade secret; unlike patents, there is no novelty or inventive step hurdle to overcome. “While there is no formal process to register trade secrets in the same way as patents and registered trademarks, it isn’t enough to simply decide that something is a trade secret,” explains Protein Production Technology International columnist, Kerry Rees, Partner & Patent Attorney at HGF. “To benefit from protection, a trade secret must be information that is firstly secret, secondly has commercial value because it is secret, and finally has been subject to reasonable steps to keep it secret.”

Concurring with Holland, Rees says trade secrets can complement other forms of IP in your portfolio including patents, trademarks, designs and copyright, and provide a valuable business asset. “Implementing a trade secrets policy as part of your overall IP strategy will help to prevent leaks of confidential information, and shows value to potential investors by demonstrating that you are taking steps to protect core business assets,” he says.

Potter Clarkson’s Tindall believes that as the alternative proteins field matures, trade secrets are likely to gain more significance. “Think of them like secret recipes – the key ingredient to competitive advantage,” he says. “Patents, unlike secret formulas, eventually become public knowledge after they expire. This highlights the importance of striking a balance between the two forms of IP protection.”

Ultimately, according to Tindall, the foundation of a strong IP strategy lies in identifying your niche. “In today’s crowded landscape, simply being a player in a specific protein category (e.g. ‘the chicken guys’) isn’t enough,” he says. “Geographic distinctions (‘European alternative protein’) may not be sufficient either. The key is to pinpoint the unique value proposition you bring. What sets you apart? Then, build your IP strategy around protecting that core differentiator. You need to think strategically about the problem you’re solving – that’s what your IP strategy should focus on protecting. For other aspects that aren’t core to your competitive edge, collaboration or open sharing might be more effective approaches.”

“Sometimes, letting go of IP is the right answer,” suggests Mathys & Squire’s Hamer. “I’ve seen companies present vast IP portfolios, and the question becomes: how much of it is actually relevant? Has your business model evolved beyond your initial inventions?”

I don’t think this is the last we’ve seen of high-profile disputes and contentious matters in alternative proteins by a long shot

IP strategy, he goes on to detail, is an ongoing process, not a static one. “It’s crucial to recognize when it’s time to move on from older technologies and invest in the next generation. Reinvesting resources from maintaining outdated patents into developing new IP can be a smarter use of funds. Constant awareness is key. While investors seek returns, competition driven by IP roadblocks isn’t always negative. It can incentivize exploring alternative solutions and potentially lead to better technologies.”

These wise words about IP strategy are from some leading experts on the topic. In reality, though, how many of the companies that our IP experts work with are attuned to the significance of intellectual property? “A significant portion of my work involves correcting misconceptions about IP, particularly in the realm of synthetic biology,” reveals Holland. “Many academics, students, and early-stage startups lack a fundamental understanding of IP. This is likely because much of this research originates in universities, where IP education may not be a priority.”

Having transitioned from a postdoc to the legal field, Holland can personally relate to this knowledge gap. “As a scientist, I wish I’d known more about IP,” she confesses. “While it might not have drastically altered my lab work, it would have been invaluable for starting a business. For startups in this sector, there are crucial IP fundamentals they simply must grasp. While there are resources available, the landscape is constantly evolving. New incubators and accelerators seem to pop up daily. My colleague Andrew (Tindall) and I frequently mentor startups in this space, but there’s always a need for more education. Thankfully, the situation seems to be improving compared to the past.”

Tindall agrees with Holland that although there’s an increasing awareness of IP within the alternative protein sector, he stresses that even with this awareness, a basic understanding can sometimes be misleading.

“This field demands a sophisticated IP strategy that varies significantly across countries,” he says. “Determining what needs protection and the best approach requires expertise. While Sara (Holland) and I have dedicated our careers to mastering this complex field, acquiring this knowledge takes considerable effort. It’s unrealistic to expect startups to possess attorney-level expertise. The most crucial takeaway for startups is the importance of IP and the need for specialized guidance. Seeking qualified advisors who understand both the alternative protein business landscape and the specific scaling challenges faced by startups is essential.

“Furthermore, the exit strategy for many alternative protein companies differs from traditional biotech,” Tindall notes. “While biotech companies might target acquisition by large pharmaceutical firms, many alternative protein companies aim for independent growth. Therefore, finding advisors who specialize in the unique needs of this sector is vital.”

Financial matters

When it comes to how much all of this advice can cost, the bills associated with obtaining and defending IP can sometimes be a deterrent for some startups in the alternative protein industry. The process of filing for a patent and prosecuting it through the patent office doesn’t come cheap, even for startups with a good chance of success. If a startup’s IP is challenged, they may need to hire legal counsel to defend their rights, which can be costly, especially for early-stage startups with limited resources. Also, there is no guarantee that a patent application will be successful: a patent office may reject the application for a variety of reasons, such as lack of novelty or non-obviousness. Then, even if a patent is issued, enforcing it against infringers can also be an expensive exercise.

The actual complexity and cost of a patent application process can be surprising to those who are not already familiar with IP. “From the initial filing to being awarded a granted patent can take upwards of four or five years, and cost in the tens of thousands of dollars,” reveals Rees. “Having to overcome multiple objections from the patent office and amend your patent application to meet the stringent legal requirements – which differ from country to country – can also frustrate patent applicants.”

Although this is a normal part of the application process, Rees says there are some strategies for mitigating against protracted difficulties in trying to get your patent granted, such as carrying out prior art searching before filing, avoiding a scatter-gun approach to filings or trying to obtain an overly ambitious scope of protection, checking that the most important commercial variants of the invention are well-covered in the application, and generating sufficient data to support the application.

As an example of the latter, Rees cites Perfect Day’s application for a dairy substitute composition, which was refused by the European Patent Office (EPO). “The EPO objected that the claimed dairy substitute composition was not distinguished from a known infant formula which, according to the examiner, is by its very nature a milk substitute composition. Terms such as ‘milk substitute’ need to be carefully defined in patent applications if they are to be relied upon for drawing a distinction over known products.

“The application contained no evidence in the form of comparative data which supported that recombinant proteins produced in fungi would solve the problem of providing a composition having desirable flavor and performance characteristics,” Rees says of the findings. “Also, no evidence was brought forward to show this, so the use of fungal cells was considered to be an arbitrary selection from known hosts. The EPO likes to see data (ideally comparative) that support any claimed unexpected technical advantage. Without the right data, getting to grant can be very difficult.”

The case was ultimately refused because the specific combination of features pursued in the amended claims was not described in the application as originally filed. “It is easy to trip up over the strict rules relating to the allowability of changes made to applications after filing,” says Rees. “It is therefore important that the commercial embodiments of the invention are adequately described at the filing date.”

Impossible versus Motif

Given the relative infancy (maturity) of the alternative proteins market overall – and the spirit of collaboration that seemingly exists, on the surface at least – patent disputes have so far been few and far between.

There is, however, one notable, high-profile exception involving Impossible Foods and Motif FoodWorks. The case is still ongoing, so none or our assembled experts are
too keen to pass much in the way of comment, although they all say it the highlights the importance of IP for startups in the alternative protein space.

Many academics, students, and early-stage startups lack a fundamental understanding of IP

In this case, heme – the protein that gives Impossible Burgers their meaty taste and aroma – has been the battleground. In short, Impossible Foods claimed Motif’s products infringed on its heme-related patents, while Motif argued the patents were invalid because using heme in plant-based meat wasn’t a novel idea. The US Patent Trial and Appeal Board is currently reviewing the validity of Impossible’s patents, while the European Patent Office has already revoked one (a decision that Impossible is appealing against).

So, how will this legal battle all pan out? “I don’t want to make any specific predictions,” says Mathys & Squire’s Laura Clews. “We’ll follow it and see what the outcome is
and inform our clients accordingly.”

What’s clear is that patents can be a double-edged sword, and the Impossible Foods and Motif FoodWorks case is a great example. Even if Impossible loses the legal battles in the long run, the lawsuits themselves can be a strategic move, according to Chris Hamer. “By tying up Motif in litigation, some might say Impossible is buying valuable time, which allows them to solidify their market share and brand recognition. Motif can’t freely develop and market their competing product while the legal wrangling continues.”

“I don’t think this is the last we’ve seen of high-profile disputes and contentious matters in alternative proteins by a long shot,” concludes Potter Clarkson’s Andrew Tindall. “We do see anonymous observations on applications in this field at the patent office, which is usually a sign that there is another interested party hoping to persuade the patent office that someone shouldn’t get a patent – because it’s old, it’s obvious, because they’re interested, and because it matters to their business. I think that’s going to increase as the biotech risk-reward matrix means there’s a lot of risks and there’s a lot of rewards, so it’s worth taking those actions. I think it’s a sign of things to come.”

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